Freight Bill Factoring for Canadian Trucking Companies

Freight Bill Factoring

As a trucking company owner and entrepreneur you need to play many roles in your business. From finding loads, meeting shippers, handling drivers, managing truck repairs, all while keeping an eye on cash flow. Actually, managing your cash flow is probably one of the most important jobs you have. Nothing can bring a trucking company to a grinding halt faster than running out of money - unexpectedly.

Most cash flow problems for trucking companies happen because shippers do not offer quick pays, and instead pay their invoices in 30 to 60 days. Most owners are not able to wait that long for payment and need money sooner to cover their company expenses. They are caught in the middle of a tug of war between slow income and immediate expenses. And if they don't manage the situation correctly, they could jeopardize their ability to run the company.

One simple way to fix this problem is to use business financing. You can use financing to operate your freight carrier while waiting for slow clients to pay. The problem is that finding financing in Canada can be very challenging. Most lending institutions are conservative in nature and will only finance companies that can provide extensive collateral and audited financial statements showing profitability. Few small and growing freight carriers can actually meet this criteria.

A better alternative

Many freight carriers would not have a cash flow problem if their clients paid quickly. You can get many of the benefits of quick paying client by simply financing your transportation receivables. This provides your company with an immediate injection of working capital, which you can use to pay your expenses. The transaction is relatively simple. You partner with a factoring company who funds your invoices and uses them as security for the transaction. The transaction finishes once your end customer pays their freight bill in full.

Why is this better?

Obviously, it will improve your cash flow. But the most important benefit is that you will be able to work with shippers who demand payment terms, without having to worry about their slow payments. This is because you can always finance a slow paying receivable if you need funds. Because of this, freight bill factoring can be a growth tool for Canadian transportation companies.

How do I qualify?

The most important requirement to qualify for this type of funding is to work with shippers that have good commercial credit. This is very important because their invoices are the collateral that secures the transaction. Also, your freight bills should be free of liens and encumbrances and your company should not have major tax or legal issues.

As opposed to banks, freight factoring companies can move quickly. Most can provide you with a proposal shortly after submitting an application. And if the due diligence goes well, your account should start receiving funding a few days after that.

Freight factoring rates in Canada as low as 1.50%
Get an online quote. Call (866) 730 1922 to speak to a representative

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